Vodafone accused of exploiting rival

Scandal-hit US telecoms group WorldCom says British firm abused its power

WorldCom, the US telecoms company exposed for fraudulent accounting, has accused Vodafone of "engaging in exploitative practices".

The allegation is contained in an eight-page letter to the telecoms regulator Oftel, in which it claims that the British mobile phone company has used its power to squeeze rival telecoms operators.

The complaint centres on a contract between Vodafone and WorldCom, which was "signed under protest" last December. In it, Vodafone agreed to connect calls made from WorldCom's telephone network to its mobile customers.

But the contract also included clauses requiring WorldCom to provide bank guarantees and advance cash payments to Vodafone. The mobile operator inserted the clauses as it was concerned about doing business with financially shaky companies.

WorldCom, headed by the former head of Compaq, Michael Capellas, is still in US Chapter 11 bankruptcy protection after it inflated earnings by $11bn (£6.6bn). It is expected to emerge from Chapter 11 before the end of the year after agreeing to pay $500m to settle civil charges.

Despite its own controversial past, WorldCom believes Vodafone has overstepped the mark. "Vodafone has both the incentive and the opportunity to abuse the application," it says in its letter. "We submit that Vodafone is engaging in exploitative practices to the direct detriment of its customers."

Vodafone and WorldCom both refused to comment.

WorldCom, currently rebranding itself as MCI, claims Vodafone's contract places "substantial costs" on other operators, "while at the same time improving Vodafone's cash flow and minimising (if not eliminating) its bad debt exposure".

The attack on Vodafone is being masterminded by Andrew MacLeod, the new European head of WorldCom and former chief operating officer of Cable & Wireless's troubled Global operation.

NTL, which exited Chapter 11 in January, is also worried about Vodafone's new contract. In a separate letter to Oftel, the cable operator said the contract sets a "very damaging precedent". NTL argues that if BT followed suit, it would have a "catastrophic" effect on rival telecoms companies, potentially forcing some out of the market. "We suspect that BT will attempt to revise its own policy," says NTL.

The letters, sent earlier this month, are in response to a draft ruling by Oftel. It broadly supported Vodafone's new contract, but said the company should take into account fac-tors such as payment history when carrying out credit assessments on other operators.

Oftel is due to make its final ruling next month.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18000 per annum: Recruitment Genius: A position has arisen within th...

Ashdown Group: Development Manager - Rickmansworth - £55k +15% bonus

£50000 - £63000 per annum + excellent benefits : Ashdown Group: IT Manager / D...

Recruitment Genius: Security Officer

£16500 per annum: Recruitment Genius: Applicants must hold a valid SIA Door Su...

Ashdown Group: Business Analyst - City, London

£50000 per annum: Ashdown Group: Business Analyst - Financial Services - The C...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss